Investment Grade Distilleries

What is Whisky Investment?

Whisky investment is the process of buying casks or bottles of whisky with the view that they will increase in value over time and sold on for profit. As an investment, it has been the fastest growing alternative asset over the last five years. In a recent KPGM study, whisky is the luxury asset investment most high net worth (HNW) advisors would recommend in the next three years.

Whisky investment is split into two categories: Investing in bottles and investing in casks, which we discuss further in our Casks vs Bottle Investment Guide. In this article we will concentrate on investing in casks, the brands which are good to invest in, the best whisky distilleries for investment, and how to navigate the cask marketplace. 

Investment grade whisky vs standard whisky 

In the bottle world, the difference in investment grade and standard whisky is clear cut. Standard whisky are bottles one can buy easily in most retail stores and investment bottles are limited bottles which are difficult to buy as they are in demand. 

With cask whisky it is a little more complicated and this is where a good advisor with market knowledge is imperative. When researching investment-grade cask whisky, here are our top tops to consider: 

Pricing and Accessibility - How Rare is it? 

A good way to check availability and price is to shop around. If a merchant if offering a cask they consider to be very rare, it then shouldn’t be easily available to others. If that cask is, then either it is not that rare, or it is the same cask being offered by multiple merchants or brokers. If this is the case, each broker and merchant will be placing their margin on the cask so that by the time you purchase it, it is unlikely to be priced well and therefore not a top whisky brand for cask investment. 

If the cask simply isn’t that rare, then it can still be a good investment if the price is right and the investment, like most cask investments should be, is for the long term.  

Quality  

Quality can be of importance. If a cask isn’t good quality, the contents may have to be taken out and placed in a second cask which is of a superior quality to bring the whisky up to a good standard for bottling. This is known as re-racking. Not having to re-rack, a cask because it isn’t of good quality will save time and money in the future. Try and either taste a sample yourself or have a trusted merchant who can test the cask for you. Most casks under 10 years old will not have been tasted, and would be long term investments, so the taste at this point is less important, but if a sample is possible, then have it tasted. 

Collectors Appeal - Bottle Packaging 

In the bottle world, collectors like to have great packaging, especially at the very top level where packaging itself can cost thousands of pounds and made from rare materials by well known craftspeople. Below this top level, packaging is less important and the whisky itself becomes more so. Older, rarer whiskies will be more desirable over a younger more available whisky with great packaging, and would be more useful as whisky as an investment.  

Top 3 most popular whisky types for investment 

Like with any investment, market trends change. However, the best whisky distilleries for investment currently seem to be dominated by three regions: Islay, Campbeltown, and Speyside.  

Islay 

Whiskies from Islay tend to be very popular and good for whisky as an investment. This is made clear out by the number of new distilleries (three) being built on this small island where planning is notoriously difficult and three more recently completed.  

Campbeltown  

Whiskies from Campbeltown also are very sought after and good for whisky as an investment, especially from Springbank. These casks are rare and expensive, so asking around regarding pricing is important. A cask from Glen Scotia in Campbeltown would also be rare and would be a good investment as they are rarely seen on the market.  

Speyside 

Speyside is a very recognisable name and has the most distilleries of any one region. However, the Speyside Distillery is a big brand name in itself, and casks which have full naming rights of the distilleries they come from will always make a good long term investment. 

Single Malt vs Blended Whisky 

It is also worth noting that single malt whisky will be the most popular and looked for whisky as an investment as each whisky is unique to its own distillery. 

Blended whisky tends not to be an investment as it is plentiful and cheap. It can become an investment if bought in bulk at the right prices to sell onto a customer looking for large quantities for bottling. However, this would be an unusual situation and should never be considered an exit, therefore staying clear of blended whisky is a safe bet. 

Considerations when choosing a  whisky distillery for investment 

In the world of single malt, each distillery has its own unique qualities and flavours, even when each distillery is creating the whisky at top quality. 

Established Distilleries 

Traditional distilleries in Scotland do offer something the new distilleries can’t. They have stability which has been gained by time. They are known to the market and have lasted the test of time. There are many which haven’t, like those which were closed in 1983 and 1985, and it is ironic that casks and bottles from those distilleries which were closed as they were superfluous to requirements are now the rarest and most valuable of all. Of the distilleries still operating which have long term stability and are very popular would be Macallan, Springbank and Ardbeg, however casks from these distilleries are notoriously hard to find and mostly overpriced.  

Emerging Distilleries 

There are other emerging distilleries which are becoming popular and are more easily found in the marketplace. Caol Ila, from Islay is always popular, as is Bruichladdich, and Ben Nevis has become very popular in recent years. These are distilleries which are good for investment.  

There are a few distilleries which are worth watching over the next year: 

1. Glenallachie: We have just started to see a few casks from Glenallachie come to the market. This distillery is owned by Billy Walker who had great success with Glenglassaugh, Benriach and Glendronach, and his new distillery is going through the same trajectory. 
2. Glen Garioch: this has been become increasingly popular and should continue to do so. Owned by Morrison Bowmore, this highland distillery has great character. 
3. Ben Nevis: this is one to continue watching as the prices are looking keener than when it first hit popularity a couple of years ago.  

Overall, there are three key indicators of top investment whisky brands: brand reputation, historical performance, and future growth prospects. At Cask Trade, our experts can help you pick an investment grade whisky which matches your goals and budget. While previous data and future growth prospects are not something to rely on, we can help you understand the current market trends at the time you are looking to invest.   

A brief insight into whisky investment strategies and storage

There are many strategies to consider when investing in whisky to suit both your personal budget and interests as well as consider market trends other economic factors: 

Diversification 

As with any investment portfolio, diversification is key. Being able to have various ages and distilleries casks in a portfolio gives the maximum flexibility at exit to get the most out of the investment. Read our whisky portfolio diversification guide for more information about what makes a good portfolio and how to diversify. 

Long-term vs Short-term  

Investing in whisky is generally a long-term investment as the liquid matures over time. This is the most risk free and stable way to invest. Short term investments can be made with older whiskies, but the risks are higher as market variations such as recessions will have an impact and you will have to pay a higher price to purchase the cask. However, this is not to say that there is no possibility of good returns. Our Beginners Guide to Whisky Investment explores more considerations such as hold time when looking to purchase cask whisky. 

Storage 

Storing whisky casks must be done in a bonded warehouse in Scotland for the resulting whisky to be called Scotch. This is not particularly expensive at around £50 per year per cask for insurance and storage.  

Documentation   

In British law, documentation is important, and if you have your own account in a Scottish warehouse then a delivery order can used. However, as with all assets, a receipt from and contract with the merchant the cask was bought from will secure ownership and authenticity. 

Exit Strategies  

Exits are hugely important with an investment in whisky casks. Whisky must end up in a bottle at some stage, so can’t always be sold to another investor. Therefore, buying from a company like Cask Trade who has many trade customers who bottle whisky is very important. Other exits can be to sell the cask back to the company it was bought from, Auction Your Cask, or place it on consignment. These are all exits which Cask Trade can assist with. The greater the number of exits and the more diverse the portfolio the more the investment will realise.  

Investing in whisky with Cask Trade 

Cask Trade are experts at all levels of buying whisky casks. From choosing the right distilleries and ages to suit the budget and length of time for the investment, securing the quality of the whisky, looking after it as it matures, through to exiting the investment. With our expert guidance and market leading stocklist, you can find the best investment-grade whisky to meet your goals. 

Learn more about the world of whisky investment via our helpful whisky investment guides. Alternately you can speak to one of our experts via email or over the phone. Simply register to be assigned a personal account manager who can talk you through the investment process and answer any questions you might have.  

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